Remuneration of the President and CEOand the Fortum Executive Management in 2016
The table below includes the salaries and fringe benefits, STI and LTI programme payments to the President and CEO and to the Fortum Executive Management during the year. The STI payments are based on the 2015 targets and achieved results. The LTI programme includes the shares delivered during the year 2016.
The STI and LTI programme payments to Fortum Executive Management members, including the President and CEO, amounted to a total of EUR 1,957 thousand (EUR 3,479 thousand in 2015), which corresponds to 0.82% (1.32% in 2015) of the total compensation in the Fortum Group. The figures exclude payments to the employees of the divested electricity distribution business. The table also includes payments made to supplementary pension arrangements for the President and CEO and for Fortum Executive Management.
Salary and Fringe Benefits
The base salary levels are set taking into account the nature of the role, local and international market conditions and individual experience and performance. The salary for the President & CEO, Pekka Lundmark, was EUR 80,000 per month, including free car allowance and phone allowance as fringe benefits.
Short-term incentives for 2015 (paid in 2016)
The STI for 2015 for the members of Fortum Executive Management was based on:
The STI payments for the Fortum Executive Management were on average 7% of the salary (17% of the maximum). The aggregate STI payment to members of Fortum Executive anagement for 2015 performance was EUR 0.26 million (EUR 0.8 million in 2014).
In total, EUR 9.6 million (EUR 13.7 million in 2014) was paid as short-term incentives across the Group for the financial year 2015. The amounts reported exclude payments to the personnel of the divested Swedish electricity distribution business. The amount paid decreased compared to the previous year, mainly due to the lower financial performance of the company.
Short-term incentives for 2016 (payable in 2017)
The STI for 2016 for the members of Fortum Executive Management was based on:
The outcome of the STI performance measures were above the set target level regarding Group financial targets. The other Group level safety target (Lost workday injury frequency) reached the target level whereas the other one (Serious accidents) did not reach the threshold level. The achieved performance based on the individual targets is evaluated in connection with the individual performance review at the beginning of the year.
The accrued incentives for the year 2016 are paid out in April 2017.
Short-term incentives for 2017 (payable in 2018)
As in 2016, the short-term incentive targets for the Fortum Executive Management in 2017 are based on the achievement of divisional targets, Group financial performance as well as individual targets. The STI performance measures and weighting are: 60% Comparable Operating Profit (for division heads 30% Group level and 30% own division), 10% lost workday injury frequency and 30% individual trategic targets.
The table sets out the pipeline of recently granted LTI awards, including details of the shares delivered in the reporting period. In December 2016, the Board of Directors approved the amended LTI programme. The share awards will not be subject to a minimum lock-up period but members of the Fortum Executive Management will be required to retain 50% of the shares until they have achieved their required shareholding level of 100% of the annual salary. For other key employees included in the new LTI plan no lock-up period will be applied. Under the 2017–2019 LTI plan, the Board-approved earnings criteria will be based on earnings per share (50%) and relative total shareholder return (50%) measured relative to the European Utilities Group.